It says that Zillow's valuation "mechanism is highly inaccurate and misleading to consumers." The complaint seeks immediate action from the FTC to stop Zillow from engaging in activities that it says deceive consumers.

The NCRC also notes -- citing its own audit -- that Zillow is off the mark with its home value estimates more than two-thirds of the time.

"Zillow is placing the American dream of homeownership at risk for countless working families," says John Taylor, president and chief executive of the NCRC in a prepared statement. "For a company that represents to consumers that they are the 'Kelley Blue Book of Homes,' this is a very dangerous situation. We call upon the FTC to intervene and ensure that Americans receive accurate appraisals and valuation information to protect the single most important investment of their lives: their home."

Seattle-based Zillow, which is backed with $57 million in venture capital and unveiled its home valuation Web site eight months ago, called the allegations "groundless."

"As we say consistently and prominently on our Web site, Zillow is a free research tool for consumers, and Zestimates are designed to be a starting point for consumers who want to learn about the value of homes," the company said in a statement. "We make every effort to explain on our site the role of Zestimates as a research tool, as well as to clearly display our rates of accuracy for every area we cover."

Amy Bohutinsky, a Zillow spokeswoman, declined further comment.

The NCRC isn't the only one concerned about inaccurate estimates from Zillow. Numerous home owners have complained that the service undervalues or overvalues homes, one of the reasons the company introduced new features last month that allow home owners to update details about their properties. Still, numerous readers on the Seattle P-I's Venture Blog (blog.seattlepi.com/venture) on Thursday noted the inaccuracies in Zillow's service.

"Zillow is a neat tool, but really needs to be improved," wrote one user of the service.

The NCRC is closely aligned with The Center for Responsible Appraisals & Valuations, an organization composed of appraisers, lenders and other real estate professionals. The organization, which was founded about 18 months ago by the NCRC, says it is "dedicated to best practices in the field of home valuations."

Glenn Kelman, the chief executive of Redfin, a Seattle online real estate service that utilizes data from Zillow, said he thinks the complaint is a "publicity stunt" motivated by appraisers who have a financial interest at heart. He has no plans to remove Zillow data from his Web site.

David Berenbaum, an executive vice president at the NCRC, said its affiliation with appraisers had nothing to do with the complaint. Berenbaum said the organization -- which has filed numerous complaints in the past about predatory lending -- is simply trying to protect consumers from a service that he described as "flawed."

"Many in the appraisal industry have said to us that it is almost an open joke the information on this Web site," said Berenbaum, adding that his own home in Fairfax, Va., was undervalued by $300,000 on Zillow until a few weeks ago. "The typical consumer looking at this would believe the representation that this is a good resource for them and they may rely on it, and that is what might get people into trouble."

For example, Berenbaum said a low-income person could be enticed into receiving a bigger loan for a home than is necessary.

"We are concerned about consumers relying on the inaccurate information and getting into a bad loan," said Berenbaum. He said low-income home owners have been targeted by predatory lenders who utilize the inaccurate information on Zillow, though he declined to share names of companies or home owners.

Zillow does disclose the accuracy rates for major markets where it values homes. It says in the New York metropolitan area that just 52 percent of its estimates are within 10 percent of a home's selling price, one of its worst accuracy rates. In the Seattle area, 73 percent of the company's estimates are within 10 percent of a selling price.

Berenbaum acknowledged that Zillow discloses accuracy ratings, but he doesn't think it goes far enough. He would like to see clearer language -- or a "Surgeon General's" type of disclaimer that indicates the limitations of the site.

"If that (automated valuation model) engine is not accurate, that needs to be clearly stated right at the get-go so the consumer understands it, not on a link somewhere later in the process that is buried," he said.

Zillow has contacted the NCRC, and the two plan to meet soon, Berenbaum said. He expressed confidence that they can resolve the issues in a way that benefits the entire home valuation industry.

This is the first time the NCRC has filed a complaint against an automated valuation model, or AVM. But Berenbaum said it is investigating actions against others.

"We feel this is a very important issue," he said.

The organization targeted Zillow because it is one of the biggest and most inaccurate of the home valuation Web sites, he said.

Don Kelly, vice president of public affairs at the Appraisal Institute, which represents the interests of 21,000 home appraisers, declined to comment on the specific allegations in the complaint. But Kelly said that services such as Zillow are inaccurate. And he agreed that consumers should treat those valuations as simply "fun and entertainment."

"I am not aware of any bank that accepts a Zillow Zestimate for loan purposes," Kelly said. "This complaint with the FTC is obviously going to bring to light some of these issues and to that extent it is probably a good thing. Appraisers are not afraid of the issue or technology ... and if this winds up making Zillow a better product or making AVMs get better over a period of time, all of that is a good thing."

Mitch Katz, a public affairs specialist at the FTC, said the agency would not comment on a complaint.

"A complaint does not immediately prompt an investigation," he said. "We can conduct informal inquiries to determine the need for or lack of a need for a formal investigation. We need to first find out whether this even falls into our jurisdiction."